Page 6 - FSUOGM Week 49 2019

FSUOGM COMMENTARY FSUOGM
Ukraine warns of new
gas war with Russia
Talks betweeen Putin and Zelenskiy in Paris did not break the deadlock
UKRAINE
PRIME Minister of Ukraine Oleksiy Honcharuk says does not rule out a “new gas war” during the continuation of the talks with Russia concerning gas transit after January 1 when the current con- tract has expired.
“Ukraine will continue to agree on gas fur- ther, perhaps it would be uneasy, perhaps with the gas war. But we are fully prepared for this: our storages are full, our logic is supported by the EU and the Stockholm arbitration decision, and Nord Stream 2 is still under construction,” the PM wrote on Facebook page on December 10.
The statement followed the Normandy sum- mit in Paris, during which “the gas issue was unblocked”, according to President Volodymyr Zelenskiy. He added, however, that details of Russian gas transit via Ukraine will be discussed later.
“It seems to me that we’ve also unblocked this [gas] issue, and now the possibility, format, vol- umes, price and other details of the gas transit agreement will be discussed at the level of advis- ers, because it is very important to everyone and to Ukraine, and for Europe’s energy security,” Interfax quoted Zelenskiy as saying. “I think that wehavegoodsteps[inthatdirection],”headded.
Meanwhile, the Kremlin said later on Decem- ber 10 that the Russian and Ukrainian presidents did not fully resolve gas problems and did not lift mutual legal claims at their meeting in Paris; specialists are continuing the dialogue.
According to Kremlin spokesman Dmitry Peskov, “final agreements have yet to be reached. It has been agreed that the heads of the gas com- panies and relevant ministers will stay in contact. Experts have already spoken briefly, including lastnight[inParis]”.
“However, we cannot say so far that problems related to the extension of the transit agreement and the settlement of claims in the Stockholm court of arbitration have been solved,” he said.
The two presidents “presented approaches of the sides,” Peskov said. “Positions of the sides have been compared; they are well known and consistent, this applies to the Russian position.” Earlier this year, Ukraine’s state-owned natural gas monopoly Naftogaz said that it assumes it will be cut off by Russia’s Gazprom from gas transit shipments via Ukraine from January 1 as its base-case scenario. The statement fol- lowed a meeting in Brussels with Gazprom, which failed to start talks on a new contract for gas transit through the Ukrainian gas trans- mission system.
Kyiv believes that Russia will suspend deliv- eries of gas, including the transit gas to Russia’s European customers via Ukraine, on January 1, 2020, when the current contract for gas tran- sit to Europe between Russia’s Gazprom and Ukraine expires. More than a third of Europe’s gas comes from Russia, and around 45% of that goes through Ukraine’s pipelines.
In November, Kyiv said that Ukraine is ready to consider the possibility of receiving natural gas from Russia’s monopoly Gazprom in lieu of cash in payment of the circa $3bn (including interest) awarded by the Arbitration Institute of the Stockholm Chamber of Commerce in December 2018.
“We are satisfied with the money, but if Gaz- prom wants to pay this debt through gas sup- plies, we are ready to consider such an offer,” Yuriy Vitrenko, Ukraine’s natural gas monopoly Naftogaz Executive Officer, told bne IntelliNews in an interview on November 26.
Last year, the Arbitration Institute of the Stockholm Chamber of Commerce ordered Gazprom to pay $4.63bn to Naftogaz for the failure to meet gas transit obligations. However, since the court previously ordered Naftogaz to pay Gazprom for gas supply arrears in January, Gazprom’s net payment after two arbitration decisions was $2.56bn.
In August, Ukraine’s natural gas monopoly Naftogaz says it will recover around $3bn from Russia’s Gazprom by late 2020, following the recent victory in the Stockholm arbitration.
Due to the unwillingness to comply with the arbitration awards, Gazprom’s debt owed to Naf- togaz is increasing by almost $200mn per year in the form of accrued interest. Naftogaz had seized Gazprom’s assets in the UK and the Netherlands, as well as restrictive measures introduced in Lux- embourg and Switzerland.
In October, Russian President Vladimir Putin called for Gazprom and Naftogaz Ukrainy to drop their legal claims relating to the settlement of a debt problem and the signing of gas transit and delivery contracts.
“This absurd should be ditched and all claims nullified on all sides,” news agency Interfax quoted Putin as saying in Hungary. “We are prepared for constructive work, both on gas pumping through Ukraine and on gas supplies to Ukraine, and [we will do so] with a significant reduction of the price, different from the one that Ukrainian consumers of the Russian gas have today.” ™
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w w w . N E W S B A S E . c o m Week 49 11•December•2019